What does Amazon’s e-commerce dominance mean for logistics service providers?

Logistics Service Providers have profited from aligning themselves with the e-commerce giant’s rapid growth.

By Patrick Burnson, Executive Editor
February 16, 2016

From its inception as an online book retailer, to being the world’s biggest e-commerce company, Amazon’s influence and control over the sector has been almost absolute. Logistics Service Providers [LSPs] have profited from aligning themselves with the e-commerce giant’s rapid growth. However, as both Amazon and customers evolve, LSPs risk being left on the shelf.

One of the key findings of Ti’s newly-released report, Global e-commerce Logistics 2016, is that as consumers continue to place their items in Amazon’s basket in ever-increasing numbers, LSPs cannot afford to cut ties with the e-commerce giant without losing significant volumes.

The report presents an in-depth analysis of the intricate and dynamic e-commerce sector, on a global scale. It also provides overviews and analysis of some of the key factors shaping the market, including consumer preferences and expectations, as well as new technologies and how they are being received.

Ti analysts have reviewed not only the market as a whole, but also the individual supply chain models of both global and regional e-tailers. Companies profiled include those operating purely online, as well as those with multi- and omni-channel business models. They include Alibaba, Amazon, CNOVA, eBay, JD.com, John Lewis, Tesco and Walmart. In addition, the report includes an overview of the activities and strategies of logistics providers within the e-commerce market, including Clipper Logistics, DPDHL, Japan Post, SEKO and XPO Logistics.

In order to find an edge in an increasingly crowded market place, the role of technology will continue to hold significant sway. New ways for consumers to track and interact with deliveries, an increase in omni-channel adoption amongst retailers, the growth of wearable warehouse technology and growing fears about cyber-attacks are just a few of the ways in which technology will change the landscape of the sector dramatically in the next few years. Those LSPs who are able to work with retailers to create the most efficient and cost effective services will be the ones who prosper. Others will find themselves shelved.

Amazon continues to make headlines over its moves to own and control more of its supply chain. For logistics providers, highlighting their involvement in the existing process is vital to ensuring their survival independent of Amazon. As retailers continue to look for competitive advantages across the whole of the supply chain, those LSPs who can trade on their success as part of the Amazon delivery machine will be best placed to survive a fierce market which continues to grow in intensity.

According to Ti Economist Global: “Any provider that establishes a strong reputation in e-commerce logistics and finds a formula which yields a consistently decent margin is set for years of success